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Dublin San Ramon Services District’s long-term credit rating by Standard & Poor jumps two levels
Dublin San Ramon Services District (DSRSD) announced at its December board meeting that its long-term credit rating by Standard & Poor’s Global Ratings was raised by two levels from AA- to AA+. The Standard & Poor’s report acknowledges DSRSD’s very strong business and financial performance during the past three fiscal years, including sound debt management, reserve policies, and long-term planning that built up liquid and capital reserves, and the Board of Directors’ willingness to adjust rates when necessary as part of the reason for the improved rating.
The new rating will be assigned to the district’s Series 2017 Water Revenue Refunding Bonds upon the closing of such bond issue. The rating increase also reflects a resurgence of development in the area and the fact that the District can pass through cost increases to customers, especially the cost of water purchased from Zone 7 Water Agency. Zone 7 Water accounts for an average of 66 percent of a residential customer’s water bill for a family of four using 26 units of water per month, as an example.
“It’s uncommon for an agency’s credit rating to jump up two levels,” said Robert Porr, senior vice president with Fieldman Rolapp & Associates, at the district’s December board meeting. “In my 31 years in this business, I can only think of two or three other agencies improving their credit ratings at one time by two notches. This AA+ credit rating recognizes the district’s financial strength.” Fieldman Rolapp & Associates is an independent municipal advisory firm providing independent financial counseling to public agencies in the Western United States.
Other factors outside of DSRSD’s influence also contributed to Standard & Poor’s increased rating of the district. The region’s strong income levels and low unemployment rates were also contributing factors. The region’s disposable income is 225 percent of the national average and the median household income is more than twice the national income at 202 percent. The Dublin and San Ramon unemployment rate is approximately three percent versus California’s 5.4 percent and nation’s 4.5 percent, based on August 2017 statistics.
The Standard & Poor’s report found the DSRSD Board of Directors to be very stable. The District has adequate reserves to weather difficult times like the 2008 economic downturn and the recent California drought. Additionally, the District has enough reserves to finance anticipated capital improvement projects for the next five years without incurring more debt.